“The only thing I can say is good luck”: How trains abolished by Switzerland are now back in business in Greece

 

Source: Investigate Europe

February 18 2022

By Eurydice Bersi

Delays, breakdowns, cancellations... For years, ETR 470 trains were the biggest headache of the Swiss railways. In the end, the Swiss sent them for scrap. But the Italian railways — which has been running all Greek passenger trains since 2017 — presented the very same trains as state-of-the-art. "Stay away from these trains," say executives who know them first hand. So why is this train — that has repeatedly put passengers in danger in the past — getting a new lease of life?

Twenty years ago, the Swiss press dubbed the ETR 470 train — serving the Milan-Switzerland route — ‘Pannenzug’, meaning ‘breakdown train’. Meanwhile, the website that documented its problems was named CessoAlpino, meaning (in elegant translation) ‘Alpine toilet’. Two former officials familiar with this train, who were contacted by Investigate Europe and Reporters United, find it hard to believe that the five remaining ETR 470s not sent to the scrapyard are now being touted as the future of the Athens-Thessaloniki rail link — the most important route in the Mediterranean country.

“The advice from Switzerland: hands off these trains,” says Walter Finkbohner, former secretary of the board of directors of Cisalpino AG, the subsidiary of Italian and Swiss railways that bought the ETR 470s from the manufacturer, Fiat Ferroviaria in the 1990s. “Buy proven trains or new trains. There is nothing for free in life,” he adds. But Greece is not in a position to accept such recommendations, nor to choose which rolling stock circulates on its tracks, since its railways were fully privatised five years ago, as required by its creditors. The Italian state company Ferrovie dello Stato Italiane (FSI) bought 100% of TRAINOSE, the Greek rail operator, for a mere €45 million. The privatisation contract remains secret, but people familiar with its terms, such as the current vice-minister for infrastructure and transport, Giorgos Karayannis, dub it “colonial”. This is unusually strong language from a member of a conservative government. The Greek transport ministry has agreed to subsidise the Italian company to the tune of €50 million a year to run certain routes, as outlined in a Public Service Obligations (PSO) contract.

Secret contracts

However, this contract also remains secret, despite Freedom of Information requests submitted by opposition MPs. Thus, passengers in Greece can only complain about subsidised routes being scrapped or neglected, without being able to prove a breach of contract. Meanwhile, PSO contracts between railway companies and most other EU governments, including between Ferrovie dello Stato and the government of Italy, are public. The Greek government promises more transparency and better oversight from now on. Last but not least, TRAINOSE has secured, until 2024, an exception from the EU Passengers Rights regulation that obliges railway companies to compensate passengers for mishaps. In practice, TRAINOSE does sometimes offer compensation for delays and cancellations but these payouts are voluntary and the sums are determined by the company.

TRAINOSE and its parent company are hitting back against criticism by drumming up the imminent launch of the “new trains that will improve comfort, safety and speed at the Athens-Thessaloniki line”.

“When network infrastructure upgrades are complete with the implementation of the ETCS (European Train Control System) traffic management system in 2022/2023, a maximum speed of 200km/h will be possible, covering the distance between Athens and Thessaloniki in less than 3.5 hours,” says Ferrovie dello Stato spokesman Carlo Valentino. The ETR 470 is indeed a fast train, faster than the meagre 160 km/h that the Greek network can support in its current state. Speed, however, is not the only characteristic that counts in the purchase of a used car, much less in the procurement of five used trains.
Tilting troubles

The key feature of the ETR 470 is its tilting mechanism, which has given it the name “Pendolino”, meaning small pendulum. When entering curves, the train is lifted by a hydraulic system on the outside and “sinks” on the inside, gaining an 8-degree inclination, which allows it to reach higher speeds. Tilting was seen as the future of railways 30 years ago, and today, some tilting trains are still in operation in Europe.

Some experts argue that the reason tilting technology hasn’t caught on was that these trains were too complex and thus not robust enough. Alstom, which absorbed Fiat Ferroviaria, manufacturer of the ETR 470, has retained the popular “Pendolino” name, but now many new models bearing that name do not have a tilting mechanism.

“The ETR 470s were not bad trains. What did not go well was the poor maintenance in Italy (Milano), despite high costs. The maintenance of ETR 470s is more than demanding. I doubt if it can be guaranteed far away from Savigliano [Alstom’s headquarters near Turin],” says Finkbohner. “Your research is very important, better to prevent than cure afterwards. After all, these trains are now of a respectable age,” he adds.

Alstom Greece has upgraded the train depot of Menemeni, in Thessaloniki, in order to provide for the maintenance of the ETR 470s. The upbeat announcements about this “new railway era” for Greece are in sharp contrast to yet another warning from Switzerland. The Swiss Railways (SBB) couldn’t fix the ETR 470’s issues even after increasing funding and taking full control of their maintenance. The former head of SBB, Benedikt Weibel, told Investigate Europe: “At one point, 50% of the complaints we received were about the [ETR 470] Pendolino, while it served 1% of rail traffic.” Weibel’s successor at the helm of SBB, Andreas Meyer, was even blunter. “We’d better get this horror over with,” he was quoted as saying in 2011.

 
Fires, breakdowns, cancellations

The ETR 470 is the train that led the Swiss railway unions to require, on a permanent basis, two specially trained staff, in addition to the driver, on trains entering tunnels longer than 1,000 metres. This was the conclusion drawn from the incident on 11 April 2006, when a Pendolino ETR 470 travelling south from Stuttgart caught fire inside the Zimmerberg tunnel. The passengers were evacuated with the help of a second railway employee who happened to be travelling on that train. That year saw the end of the ETR 470’s short career in Germany, where it was initially received with great enthusiasm as it saved almost one hour on the Milan-Stuttgart route. According to the website hochgeschwindigkeitszuge.com, it was withdrawn from service in Germany because the tilting system repeatedly malfunctioned at a certain point on the route.

Another fire broke out on an ETR 470 in May 2011, only five minutes before entering the 15 km-long Gotthard tunnel. In 2012, an ETR 470 caught fire in the Zurich Central Station. In the same year, a carriage turned into a “shaker”, wobbling its passengers for 10 minutes at Lucerne Central Station due to an extremely rare malfunction of the tilting system.

“The ETR 470s must be immediately replaced by other rolling stock,” said a joint resolution of the Swiss train drivers’ and railway employees’ associations in May 2011. “Since their entry into service in 1993, the ETR 470s have continually experienced the same technical problems, which cannot be resolved. They constantly cause enormous difficulties for traffic and damage the image of the railways. They often fail to keep to timetables, stop mid-journey or break down completely. All this puts staff under great pressure, exacerbated by constant and justified complaints from passengers.”

Finally, in 2014, when Swiss Railways sent its own four ETR 470s to the Kaiseraugst train dismantling yard, saving one first-class carriage for the railway museum, Trenitalia rerouted its own five on the gentler Rome-Reggio Calabria route. There, as on the Swiss line, the ETR -470s were complementary to other, more advanced trains. There is no data on how many of the five were fit to run at the same time. When asked by Investigate Europe, Ferrovie dello Stato spokesman Carlo Valentino replied that everything went well: “After the initial period of adjustment to new engineering systems, the performance of the trains has always been very good, with absolute maintainability and reliability compared to the rest of the train fleet,” he said.

But in fact, the ETR 470s differ from the rest of Trenitalia’s fleet because they were never fitted with modern fire protection systems. By 2005, past incidents had convinced Italian authorities to toughen fire protection regulations and to require high-pressure water mist systems on the ceiling of every wagon entering tunnels longer than 500 metres (UNI 11565 standard, revised in 2016). The regulation was immediately applicable to all new trains, while trains already in service had to either be modernised or withdrawn before spring 2020 (due to the pandemic, the deadline was slightly postponed). Instead of upgrading the ETR 470s to make them fit for tunnels, FSI sent them to Greece.

On the Athens-Thessaloniki route, there are several tunnels over 500 metres long, while four (the Kallidromon, Othrys, Tempi and Platamonas tunnels) are over 2.5 km long. Was the advanced active fire-fighting system included in the overhaul of the ETR 470s after they left service in Italy and before they arrived in Greece? Investigate Europe requested the list of works from Alstom Greece, which did not reply, directing questions to TRAINOSE, which didn’t provide the list either.

Press reports indicate that the answer is no. The trains were reportedly adapted to the Greek 25kv power supply network and fitted with the ETCS traffic management system, new passenger information screens and WiFi. Ferrovie dello Stato states that “ETR 470s have a fire protection system and there are fire extinguishers on the trains. The UNI11565 standard is Italian legislation. The ETR 470s comply with Greek legislation”.

They most certainly should comply, otherwise, they will not be licensed by the Greek railway regulator, RAS. (In spring 2021, TRAINOSE was met with a firm no by RAS after applying to licence the ETR 470s without fitting them with adhesion-improving sand-dispersion devices, as required by Greek national rules.) But, on fire safety, RAS told Investigate Europe that in Greece, there is no national rule requiring high-pressure, water mist active fire-fighting systems for wagons entering tunnels, like there is in Italy.

 
Neglected network

There is more. Turin Polytechnic transport engineering professor and author of studies on tilting trains, Bruno Dalla Chiara, explained to IE that these trains require excellent track maintenance, otherwise they interpret the uneven height of the rails as entering a curve, activating the tilting mechanism, even though the train is travelling on a straight line. Also, their big asset — their capacity for swift acceleration, increases the risk of losing traction. “Good track maintenance is a prerequisite. If you send a tilting train on a line that is not well maintained, you’re going to have a problem,” Dala Chiara pointed out to Investigate Europe. But in Greece, large creditor-mandated cutbacks have left the new OSE (network operator), with 800 employees, a ratio of workers to kilometres of rail lines that is less than half the European average. The former state monopoly, OSE, employed around 12,500 people.

Today, the new OSE (network) and TRAINOSE (train operations and train maintenance) employ around 2,000 people in total. Many older workers retired without a chance to share hard acquired know-how with a younger generation of railway personnel. This workforce struggles to meet the most basic needs, as was painfully obvious during the January 24 cold snap when, for the first time in living memory, two intercity trains were stuck in the snow for multiple hours, in the main and most modern line of the country, between Athens and Thessaloniki. On this point too, Ferrovie dello Stato sees a non-issue for the deployment of the ETR 470: “As far as railway infrastructure is concerned, there are no particular limitations,” said spokesman Carlo Valentino.

Finkbohner, the former secretary of the board of Directors of Cisalpino, points out that there are examples of trains similar to the ETR 470 that work very well, such as the CPA4000 in Portugal, which connects Lisbon and Porto at speeds of up to 220 km/h. Portuguese train drivers told Investigate Europe that they enjoy the ability to enter curves without slowing down, while Comboios de Portugal (CP, the Portuguese Railways) said they were satisfied with the performance of these trains. “In 2003, we switched to an RCM II maintenance methodology, similar to that used in nuclear power plants and aviation, increasing the availability of these trains by 20% and their reliability by 50%,” says CP spokeswoman Ana Portela.

The CPA4000s, assembled in Portugal and sourcing components from different contractors than the ETR 470s, run on a flat line along the Atlantic coast, one without tight bends and steep gradients. Between Lisbon and Porto, there is no trace of a hill, unlike the steep mountains found between Athens and Thessaloniki, where the terrain is more akin to the Italian-Swiss Alps than to the Portuguese coastal plain.

So how have the ETR 470s fared so far in the test runs on the Athens-Thessaloniki line? Could it be that, in order to simplify maintenance and prevent potential issues, TRAINOSE will deactivate the tilting mechanism, reducing train speed, as the Polish railways have done with their own Pendolinos? Then why all the fuss about “fast trains”?

“On the Pendolino,” says Weibel, the former head of Swiss Railways, “the only thing I can say is good luck.”

With contribution from Paulo Pena, Maria Maggiore, Ingeborg Eliassen and Lorenzo Buzzoni. Editing by Sindhuri Nandhakumar and Nikolas Leontopoulos (Reporters United).

Germany's hypocrisy over Greece water privatisation

 A protester holds a greek flag in front of the Greek parliament during an anti-austerity demonstration in Athens. Photograph: LOUISA GOULIAMAKI/AFP/Getty Images

Πηγή: The Guardian
By Karl Mathiesen
Aug 14 2015

Germany has been criticised for pushing Greece to sell off its water utilities when many of Europe’s largest cities, including Berlin, are buying back theirs.

Greek activists are warning that the privatisation of state water companies would be a backward step for the country.

Under the terms of the bailout agreement (pdf) approved by the Greek parliament today, Greece has pledged to support an existing programme of privatisation, which includes large chunks of the water utilities of Greece’s two largest cities – Athens and Thessaloniki.

Hamburg at forefront of global drive to reverse privatisation of city services


There is an ongoing debate about water privatisation and the role of business. Across Europe a wave of austerity-driven privatisation proposals have led to protests in Ireland, Italy, Greece and Spain. At the same time, some of northern Europe’s largest cities, including Paris and Berlin, are buying back utilities they sold just last decade.

President of the Thessaloniki water company trade union George Argovtopoulos said a move to a for-profit model would raise prices for consumers and degrade services.

“It’s not any more a democracy or equality in the European Union. It’s a kind of business,” he said, adding that austerity measures that require water privatisation smacked of a “do as I say, but not as I do” approach from Germany.

“We know that in Berlin, just two years ago they remunicipalised the water there, although they paid just under €600m to Veolia [to buy back its stake]. It’s clear that the model of privatisation of water has failed all around the world,” he said.

The German finance ministry refused to comment ahead of a Eurogroup meeting in Brussels on Friday where the third bailout deal looks set to be signed. But the deputy finance minister Jens Spahn told German breakfast television on Tuesday that sell offs of the electricity and rail sectors had benefited Germans.

“Privatisation isn’t just about raising money, it’s about changing parts of the economy,” he said. The new bailout requires Greece to sell off €50bn worth of public assets.


The best answer to bad government is good government. Don’t hold out for privatisation.Maude Barlow, Food & Water Watch

Manuel Schiffler, a former project manager for the World Bank and author of the book Water, Politics and Money, said privatisation only made sense where there was a need to improve efficiency. In the case of Thessaloniki in particular, he said, the water system was already quite well run.

“I think it’s a privatisation for the wrong reasons. It’s only for fiscal reasons and not in order to improve the services provided by the utility,” he said.

Maude Barlow, the chair of Food & Water Watch said that years of experimentation with privatisation in developing countries had shown: “The best answer to bad government is good government. Don’t hold out for privatisation. It’s not a perfect system and I know Greece has it’s problems, but privatising their water systems is not a good answer to the crisis there.”

Argovtopoulos’s complaint was backed by public water campaigners in Germany. “There’s a wave of public repossession of this resource going on in Germany after it sunk in that pricing it can’t be left to profit-seeking boardroom managers,” managing director of the German Alliance of Public Water Management Christa Hecht told Greek newspaper Kathimerini. “Water is a vital public asset and the Greeks are right to want to keep it that way.”

Germany rebels

In Berlin, 12 years of private ownership saw tariffs rise by nearly a quarter, according to Schiffler. But whether or not privatisation was to blame is disputed. Schiffler said that the rise was only marginally higher than the German average and that privatisation in Berlin actually lead to positive consumer outcomes through improved efficiency and service.

Even so, a Berlin consortium of Veolia, RWE and Allianz bore the brunt of public price dissatisfaction. The city bought back its shares in utility Berlinwasser in 2012 and 2013, despite being saddled with very high levels of debt. The process has been repeated in eight other German cities, including Stuttgart andHamburg.

“[Now] they demand that they do in Greece, exactly what they are undoing in Germany,” said Barlow.

France’s Suez and Veolia, the world’s two largest water companies, will be among those interested in Greece’s utilities if the government’s shares are sold off. Yet in France – another of Greece’s creditors – as many as 49 cities (pdf) have bought back their water since 2000.

“It’s a financial colonisation,” said Argovtopoulos. “It’s an attempt for companies in the north of Europe, the rich countries. To own monopolies, like water systems, electricity and gas, in the poor southern countries in Europe. It’s a game of power and money.”

Water privatisation: a worldwide failure?

Austerity-led changes to water supply have been fiercely resisted across Europe’s most indebted countries. In Dublin this year, huge protests erupted over plans to directly charge water users who previously paid for water through their taxes. This was seen as a first step towards selling off Ireland’s water supply.

A water privatisation push by former Italian prime minister Silvio Berlusconi wascrushed by a 95% referendum vote in 2011. A similar referendum in Thessaloniki last year delivered a 98% vote against.

A 2014 report by the Transnational Institute’s Satoko Kishimoto found that across the world 180 cities had bought back (or remunicipalised) their water supply. She said this was a response to almost universally higher water prices and the loss of control over a fundamental resource.

“A public water company is much more tightly regulated and obliged to provide water services for all,” said Kishimoto.

Barlow said the austerity-driven privatisation of water supplies was a challenge to the recently enshrined UN right to water.

“Up to five years ago, when people were talking about the human right to water they meant the global south. Now it’s come to the north,” she said.

In Greece, where the people voted overwhelmingly against a less severe bailout package than the one prime minister Alexis Tsipras is set to sign, there is great anxiety over where the axe will fall first.

In 2014, the pro-austerity Samaras government’s attempt to sell off the Athenian water supply was stymied when the country’s highest court ruled the sale was unconstitutional. Argovtopoulos said any move by Tsipras to proceed against the will of the public and the ruling of the judiciary would be very poorly received in the frustrated community.

“We expect this government to respect this decision [from the court]. This is a check point for this government. If it passes this red line, it’s going to be like the former government,” said Argovtopoulos.

Greece faces collapse of second key privatisation

Πηγή: FT
By Kerin Hope
June 27 2013

Greece is struggling to avoid the collapse of a second big privatisation, amid pressure from bidders for the state gaming monopoly to change terms of a deal agreed last month.

The problems with the €700m sale of OPAP threaten to add to tension with Greece’s international creditors, who fear the slow pace of privatisations will require further more cuts to keep the country’s bailout programme on track.

Emma Delta – a bid vehicle backed by Greek oil tycoon Dimitris Melissanidis and Czech billionaire Jiri Smejc – made the only offer for the Greek state’s 33 per cent holding in OPAP.

According to documents seen by the Financial Times, Emma Delta now wants to cancel two elements of the deal: a three-year, €110m contract with Intralot, OPAP’s Athens-based technology supplier; and a 12-year concession to operate the Greek state lottery in return for a €190m down payment and €50m annually.

The lottery was awarded last year to a consortium including OPAP, Intralot and Scientific Games of the US, the world’s largest lottery software provider. Neither contract has been signed.

Greece’s privatisation agency, Taiped, has rejected formal complaints by Emma Delta threatening to pull out of the deal and take legal action if its demands are not met.

Costas Louropoulos, OPAP’s chief executive, complained in an email seen by the FT that he felt put under pressure by Mr Melissanidis in a series of telephone calls.

“He insulted me, as on many previous occasions . . . You dare to sign [the Intralot and lottery contracts] and I will take your head off,” Mr Louropoulos quoted Mr Melissanidis as telling him on May 20.

Taiped failed to deliver one flagship privatisation this month when Gazprom unexpectedly pulled out of the bidding for the state natural gas supplier Depa. If the OPAP sale falls through, Greece’s privatisation programme will be in disarray, raising the possibility that the “troika” of international lenders – the International Monetary Fund, European Central Bank and EU Commission – could appoint international managers to replace Greek executives hired by the Athens government to sell €15bn of state assets by 2016.

A review of Greece’s bailout by the IMF this month found that income lost through slippage of the privatisation programme would contribute to a hole in Athens’ budget and “additional financing will need to be identified”.

The disposals of Depa and OPAP were expected to cover about half this year’s €2.6bn target for privatisation revenues agreed with the EU and IMF but failure to sell OPAP would probably to see income from disposals this year fall below €1bn. The target has already been revised downwards twice because of the risks associated with investing in recession-mired, politically unstable Greece.

Taiped has pulled off only one sizeable deal this year: the €400m sale of Desfa, the natural gas grid operator to Socar, the state gas operator of Azerbaijan.

Mr Melissanidis controls Aegean Marine Petroleum Network, a global supplier of marine fuel listed on the New York Stock Exchange. Mr Smejc is the owner of Emma Capital, an investment company, and is one of the largest shareholders in Greece’s Piraeus Bank.Stelios Stavridis, Taiped’s chairman, insists that the OPAP deal must not be changed. “The country’s credibility is at stake,” he said. “We’ve made clear that we’re responsible people [at Taiped] and that no one can interfere with our work.”

The other partners in the vehicle are also financial investors: Russia’s ICT group, J&T Finance of Slovakia, Czech-based KKCG and Christos Copelouzos, a Greek businessman with ties to Gazprom. Lottomatica, the Italian gaming operator, is also a participant.

Critics of Greek privatisation say the OPAP dispute illustrates how Taiped’s mandate to “sell to the highest bidder” without giving priority to qualitative criteria or operational experience has undermined the programme. “The programme has suffered overall because of a lack of interest from globally recognised players,” said one consultant who declined to be named.

Mr Stavridis, Taiped’s third chairman in less than a year, said he was “cautiously optimistic” about persuading Emma Delta to drop its demands. “We negotiated the OPAP deal in a transparent way and in line with international practice. Now we have to make it stick,” he says.

A spokesman for Emma Delta, on behalf of Mr Melissanidis, declined to comment. Mr Louropoulos could not be reached for comment.

CEO of Sintez Group: 'Greece’s transformation into a natural gas transit hub for Europe'

Πηγή: Natural Gas Europe
Jan 29 2013

The CEO of Sintez Group, Andrey Korolev, provides us his views and comments regarding the participation of Sintez's subsidiary Company Negusneft in the privatization competition for the Greek natural gas companies DEPA & DESFA.

He answers on the key questions surrounding this privatization, especially competition issues, corporate challenges and considerations, along with Negusneft’s future intention regarding the Greek natural gas market.

"If we win the DEPA/DESFA auction we will be committed to comply in full with EU energy regulation"

What are the general intentions regarding Negusneft's participation in the DEPA-DESFA privatization process, and more specifically, how does your company view the prospects of the Greek natural gas market?
“We believe that DEPA and DESFA are high-quality assets that can play a meaningful role inGreece’s transformation into a natural gas transit hub for Europe. This development would clearly be of benefit to the Greek economy through diversifying Europe’s gas supply options and ultimately bringing gas prices to a more competitive level, with lower energy prices being a key element of any long term economic recovery. As a long-term player in the Balkan’s energy market, SINTEZ wants to play a role in that transformation.

DEPA and DESFA are a natural fit with SINTEZ Group’s existing business assets in the Balkans, namely our combined cycle heat and power project in Skopje, which we have already been in talks with Greece about connecting to DEPA via a Greece-Skopje interconnector project. There are a number of additional infrastructure-related opportunities that make DEPA and DESFA a strong platform for growth in the region.

The challenges that Greece is currently facing cannot last forever. Having operated for 25 years in the former Soviet Union and countries such as Namibia and Indonesia, our company is quite adept to working in such challenging and transitional environments.”

What is your opinion regarding any challenges you may have experienced as a company during the privatization process thus far and how do you assess your communication and cooperation with the Greek authorities?

“We are pleased that the HRADF (Privatization agency) recently has commenced the final round of the privatization of DEPA and DESFA, albeit later than was originally announced. Now, shortlisted companies, including SINTEZ subsidiary Negusneft, will have access to the data room and necessary documentation in order to put together a comprehensive binding offer for DEPA and DESFA.”

It would be of great interest to note from you, around the future projects or strategy by your company in relation to DEPA-DESFA. How do you see a potential partnership unfolding and what may be your investment plans for these companies?

“Clearly, the transformation of Greece into a gas transit hub for Europe will require a great deal of investment for new infrastructure. However, it goes without saying that the development of the Greek gas market will be beneficial for the country, as it can create new jobs and, more importantly, diversify natural gas supplies into the country, thereby spurring competition and having a positive effect on gas prices in the region.”

With regards to another issue that has recently gained prominence in the EU and Greece, that is the competition rules as implemented by Brussels and the compliance of natural gas companies with the Thrid Energy Package. In your view, does this affect your company in relation with its intentions to bid for both DEPA & DESFA?
“SINTEZ Group is an independent company and we do not have the conflicts of interests as with some other bidders, who are state-owned gas producers. If we win the DEPA/DESFA auction we will be committed to comply in full with EU energy regulation, while at the same time diversifying gas supplies and investing in infrastructure to transform Greece into a natural gas transit hub. We remain confident that given our strategic focus on the Balkans and relevant sector expertise, SINTEZ Group is the right fit to further develop DEPA and DESFA.”

Editor's note: According to Al Jazeera "The waters off the Greek island of Crete could hold up to 3.5 trillion cubic metres of natural gas

".

Greece puts itself up for sale

A boy cycles past a banner which reads in Greek "All the gold in the world can't buy water" at the village of Ierissos in the Halkidiki peninsula in northern Greece.

Πηγή: Global Post
By NIKOLIA APOSTOLOU AND MARINA RIGOU
Jan 19 2013

ATHENS, Greece — Straddled with mammoth debts, the government has begun one of the biggest fire-sales in history — Greek-style.

Everything from police and tax agency headquarters in Athens to some of the world’s most beautiful beaches are now open for investment at bargain basement prices as the government struggles to raise capital.

Take Afandou, a beach on the island of Rhodes. It could be yours for about $85 million.

Selling it could help this country recover from economic catastrophe. But that’s not how locals see it.

Elisa Malliaraki, 29, who owns a pharmacy in Rhodes’ medieval town, says losing public access would be “tragic.”

“We already can’t access many of the beaches on the island since there huge hotel units informally block our way,” she said.

Beach access may seem minor compared to the enormous burdens facing the Greeks. Their ailing economy is barely staying afloat on rescue loans from other European countries and the International Monetary Fund.

The IMF said on Wednesday that it will release an aid installment of $4.3 billion, which had been frozen for months over fears the troubled Mediterranean country wasn’t implementing the required austerity and other measures.

Among them, Greece’s agreement with the so-called troika of creditors — the European Central Bank, the European Commission and the IMF — commits the government to raise $67 billion through privatizations by 2022.

“The state loses money every day because it keeps ownership, and more significantly control, of these enterprises,” said Nicholas Economides of New York University’s Stern School of Business.

Besides the beaches, some of the items on sale include: 35 government buildings; the government’s stake in South Eastern Europe’s biggest oil company, Hellenic Petroleum (HELPE); shares in Athens airport and the Hellenic Horse Racing company; the Athens Water Supply and Sewerage Company (EYDAP); rights to 39 regional airports and 12 ports; the state lottery; and the Hellenic Post, the Greek post office.

But some argue that Greek taxpayers will lose in the longterm.

Even buildings housing Greece’s most important public services — such as the police and new offices for the health, education and information and communication ministries — are up for sale.

But no official has yet clarified where their bureaucrats will move. Many believe some of the ministries will lease back the buildings from their new private owners.

“If that’s true, it’s good in the short-term, but not in the longterm,” said Theodoros Pelagidis, an economics professor at the University of Piraeus. Leasing buildings for those agencies would increase the state’s expenses over time, he added.

Meanwhile, the blowout sale is bringing in much-needed euros to Greek government coffers. OPAP, the gambling company that runs Greece’s 13 lotteries, is a big earner. But although it generated more than $700 million in 2011 alone, its sale is expected to pull in only $2 billion.

For a country $16.3 billion in the red during the first nine months of 2012, some argue the government needs to hold onto every moneymaker it has.

“The shift in ownership means the state will collect money [in the short-term],” said Yiannis Metaxas, professor of political science at University of Athens. “But you are giving up the [long-term revenue that comes with] access to the purchasing public.”

Allegations of corrupt privatizations have created more criticism. Most of the state-run Agricultural Bank of Greece (ATE) was sold to the private Piraeus Bank for $125 million in July. Analysts value just one part of ATE, its real estate book, at more than $1 billion.

More than that, taxpayers will end up losing an equivalent of $14 billion on the sale because they still hold onto the bank’s liabilities even as Piraeus gained its assets. Many Greeks are angry about what they claim is a bad deal for taxpayers.

“ATE’s sell-off was a quick write-off of politicians’ corruption in their transactions with businessmen,” said Helen Tsourounakis, an English teacher in Athens.

But the bank isn’t the only sale many say has been badly handled.

The International Broadcast Center (IBC) once housed the world’s top journalists. It is a gleaming media palace built for the 2004 Athens Olympics.

Four years ago, the Greek government leased out the building for 40 years. The winning bidder was Lamda Domi SA, a company owned by one of Greece’s richest families, the Latsis.

Normally the lease would mean a total of about $465 million for the government, but in October it leased the TV center again — this time, for up to 140 years. Lamda won again. But this time, the Latsis will pay just $150 million. The government failed to explain why the previous lease was canceled.

The Greek government appears determined to proceed with the privatizations nevertheless.

“I’m going to bite iron to bring investors,” was Prime Minister Antonis Samaras’ colorful mantra last year.

But although economic indicators are starting to look less bleak, investors haven’t come flocking back yet, and there are several theories about why.

Takis Athanasopoulos, who is overseeing the privatization program, told Greek media that investors have been scared off by the political chaos: “This year included the formation of an interim government, the [bank] negotiations, the second loan agreement, two elections, and the formation of the unity government” in charge of Greece.

Some say comments by Greece’s northern European critics haven’t helped attract investors.

“Whenever a German, an Austrian or a Dutch politician refers to our exit from the euro zone, I say to myself: How can I privatize public enterprises?” Samaras recently told German newspaper the Sueddeutsche Zeitung. “Which businessman would want to invest euros in Greece, if they found that they were then obliged to collect [returns] in drachmas?”

But critics say that although privatization can benefit both the state, which earns revenue, and consumers, who gain private sector efficiencies, that’s not likely to be the case in Greece.

“Privatizations aren’t a curse — they can work for consumers’ benefits, like in England with the private electricity companies that drove prices down,” Tsourounakis said. “You know what happened with the first private electricity companies, here? They took the people’s money. It’s a decaying country. What do you expect?”

Greece: Selling Assets Among the Ruins

A PPC plant in Greece: tough union, low share price 

Πηγή: Bloomberg
By Jonathan Stearns and Natalie Weeks
August 23 2012

In the mountains of northern Greece lies an $800 million power plant whose future may help determine whether the country can salvage its place in the euro zone. The facility near Florina, the town known as “Where Greece Begins,” is the most modern of four production units that the state-controlled Public Power Corp. is scheduled to sell to competitors to meet European Union demands that the country deregulate its energy market. Public Power, or PPC, is itself a prime candidate for sale to help the Greek government raise the money it needs to support its budget and satisfy the demands of the International Monetary Fund, the European Commission, and the European Central Bank to shrink the government.

If the government of Prime Minister Antonis Samaras goes ahead with plans to sell the four power units, the most powerful Greek union, whose workers man the plant, threatens nationwide blackouts. “We will make saving PPC a cause for all Greeks,” Nikos Fotopoulos, head of the 18,000-strong Genop union, said in July in his Athens office, which is adorned with photos of Lenin and Trotsky. “We fight our battles with faith and passion, and we fight them hard. A serious state must control businesses of strategic importance.”

Founded in 1950 to distribute domestically generated electricity to Greek consumers, PPC is a microcosm of the political protection, vested interests, and reliance on foreign financing that have defined the economy for decades. Any outside investor who buys into the utility or its Florina plant would have to deal with the union.

A new owner would also have to lock in a supply of the soft, brownish-black coal called lignite that the plants rely on for fuel. The utility is fighting to keep its monopoly on the locally mined coal, which is so vital to the company that it’s in the process of moving a whole village to extract more of it. EU regulators ordered Greece in March 2008 to loosen the company’s stranglehold on lignite, saying competitors faced unfair market barriers and that as a result Greece was in violation of European law.

Since forming a government after the June 17 election, Samaras and his ministers have been in talks with the EU, ECB, and IMF to keep aid flowing during the fifth year of Greece’s recession. They are seeking at least €11.5 billion ($14.2 billion) of further budget cuts for 2013 and 2014. Samaras has vowed to make the sale of state-owned assets a priority and last month appointed former PPC chief executive officer Takis Athanasopoulos as chairman of the organization that manages the privatization program.

Athanasopoulos, a U.S.-trained business manager and university professor, battled the union boss Fotopoulos during his tenure at PPC over issues ranging from job cuts to teaming the company with partners such as Germany’s RWE, that country’s No. 2 utility. PPC employs 20,000 people, compared with about 38,000 in the mid-1990s, and is now restricted to one new hire for every 10 departures. “We are determined, as a government of three parties, to press on with structural changes, with state asset sales,” Samaras told reporters on July 26. His New Democracy party has formed a coalition with the Democratic Left and Pasok, the socialist group traditionally backed by the unions.

The standoff is a test of Samaras’s ability to prove to the euro area and the IMF that Greece is meeting their demands to open markets to competition, scale back state ownership of companies, and cut red tape. The asset sale program also may involve lowering the state’s stake in PPC to a minority position from the current holding of 51 percent. The company’s shares have collapsed by 61 percent in the past year, and its net debt at the end of the first quarter stood at €4.85 billion.

If the Samaras government had to sell the utility soon, it would probably get a fraction of the true value of the company. “The government is committed to proceeding with the privatization of PPC in an organized fashion,” Assimakis Papageorgiou, Greece’s deputy energy minister, said in an Aug. 1 e-mail. He declined to elaborate on the plans, saying they are still being developed. In Greece, selling a state business is never going to be easy.

The bottom line: The Greeks need budget cuts of up to €11.5 billion for 2013 and 2014, increasing the pressure to sell state assets.

Greece seeks investors for small ports and marinas

Πηγή: ekathimerimi
August 14 2012

An interministerial committee gave the green light on Monday to the country’s privatization fund to issue concessions to investors to run 23 small ports and marinas around the country, as part of the coalition’s drive to increase revenues.

The right to issue tenders for these ports passed to the Hellenic Republic Asset Development Fund (TAIPED), the Finance Ministry said. Ports in Zakynthos, Katakolo and Argostoli are in the cluster of assets, which also includes marinas in the southern Athens suburb of Glyfada and on a number of islands and resorts. The operation of the small ports and marinas will continue as normal until investors are found.

The Finance Ministry’s decision drew strong criticism from the Communist Party. “If the people do not obstruct them, this government and the European Union are capable of handing over to the shipping tycoons and big businessmen not just the rights to ports but to the sea itself,” KKE said in a statement.

Last month the Thessaloniki Port Authority, which operates Greece’s second-biggest port, invited two investors, Lamda Development and Aktor, to submit binding bids in a tender to build and operate an 11.3-million-euro marina.

The 218-berth marina will take about three years to build. The concession to run the facility will be for at least 30 years and will help to boost tourism as well as recreational and cultural activities at the port, according to the port company.

The same government privatizations committee on Friday approved the sale of state stakes in ELTA, the country’s postal service, and Hellenic Vehicle Industry (ELVO). TAIPED will decide on the sale process for as much as 100 percent the state owns in ELTA. Postal workers oppose the sale.

Greece to sell gas firm, grid operator this year: source

Greece's Prime Minister Antonis Samaras addresses parliamentarians during a session at the parliament in Athens July 8, 2012.

Πηγή: Reuters
August 6 2012

Greece wants binding bids for its state-owned natural gas company and gas grid operator by the end of September and hopes to complete their sale in late autumn as it revives its privatization drive, a government official told Reuters on Monday.

Hoping to regain credibility with international lenders keeping Greece afloat, the new conservative-led government has made speeding up privatizations a priority but has admitted delays from repeat elections in May and June.

After a meeting between political leaders and the finance minister on privatizations, the official said the government's priorities also included the sale of betting firm OPAP, the old Athens airport and buildings in Athens and on the islands of Corfu and Rhodes.

"What we're aiming for through the privatizations, apart from generating revenues, is to change the role of the state in the economy," the official said on condition of anonymity.

He said Russian, Italian, U.S. and French companies had expressed an interest in the natural gas company DEPA and gas grid operator DESPA.

Athens initially targeted privatization proceeds of 50 billion euros ($62 billion) by 2015 but cut the target to 19 billion euros after a making slow start on the program.

Former privatizations chief Costas Mitropoulos, who stepped down last month after accusing the government of hindering his efforts to sell assets, estimated that Athens would not raise more than 300 million euros from privatizations in 2012.

It had targeted 3 billion euros for this year.

More than 90 percent of the privatization program includes the lease and sale of concessions of state land and infrastructure, the government has said.

Israeli firms compete in Greece fire sale

Companies competing for purchase of Greek state assets as it pushes ahead with its world-record 50 b. euro divestment program.

Πηγή: Jerousalem Post
By NADAV SHEMER
April 1 2012

Several Israeli firms are competing for the purchase of Greek state assets as the debt-stricken country pushes ahead with its world-record 50-billion-euro divestment program.

Mekorot Israel National Water Co. is in informal discussions to purchase the Athens and Thessaloniki water and sewage companies. One Israeli group is among 17 anonymous foreign bidders for natural-gas company DEPA. Another has expressed interest in buying weapons manufacturer Hellenic Defense Systems.

Hellenic Republic Asset Development Fund CEO Costas Mitropoulos revealed the above to reporters in Tel Aviv on Sunday, in between meetings with about 50 different potential Israeli investors. He said he hopes to attract Israeli interest in tender processes for other assets, including The Hellinikon, Athens’s abandoned former international airport and the site of Europe’s largest urban regeneration project.

HRADF has been given the enormous task of facilitating the privatization of dozens of public assets, with the aim of reducing Greece’s massive public debt and averting a sovereign default. Real estate accounts for about 55 percent of the expected proceeds, infrastructure (including energy) for 35%, and the sale of government shares in corporations such as Hellenic Telecommunications will account for the remaining 10%.

The fund, which was established last August, aims to raise 19 billion euros by 2015. Total cash proceeds from the sale of gaming and mobile telephony licenses last year amounted to about 1.6 billion euros and accruals to 1.8 billion euros.

Mitropoulos and his team are under no illusions about the difficulties they face. However, he said, the 17 expressions of interest for DEPA represent “a major sign of confidence” – especially when compared to the 2011 privatization of Portugal’s electricity corporation, which received official interest from only five parties.

“We are inviting investors from around world that take a similar view to us, who look at the long-term horizon and who believe that in Greece they can make the extra return they are after,” Mitropoulos said. “Its success depends primarily on international market conditions and also on our ability to proffer the assets and put them on the market.”

Each asset will ultimately be rewarded to the highest bidder, he said. The state’s 65% share in DEPA, 51% share in the Public Power Corporation and 35% share in Hellenic Petroleum will all come under the hammer. So, too, will 12 major seaports, about 350 smaller seaports, 37 regional airports, six highways and prime tourism land.

Greek economists estimate the privatization program will add .3% to gross domestic product over the period in which it takes place, Mitropoulos said.

The Organization for Economic Cooperation and Development expects the Greek economy to contract by 3% in 2012, before beginning the slow path to recovery with 0.5% growth in 2013.

Mitropoulos said one of his main challenges would be selling under pressure.

“There is a divide between the value of the assets that we receive under normal conditions,” he said, “and the price we are likely to achieve in the [current] market… To bridge this gap, we are consistently and deliberately employing earn-out or drawback schemes, where we will draw more value as things get better.”

Mitropoulos acknowledged that a large portion of the population is unhappy about the program, but recent attitude surveys conducted by the fund found that 84% of Greeks are willing to see assets sales if this translates to real value.

“Real value for the population means investment and jobs,” he said. “Everybody realizes that there will be real investment, [and] there will be jobs generated from the privatization program.”

Greece burning the furniture to survive

Πηγή: Business World
By Reuters
March 27 2012

Greece's wretched experience has been a poor advert for asset sales as a tool to cut state borrowings, but others in the euro zone high debt club are much better placed to make a decent fist of privatisations. Italy, Spain and Ireland, all of which are grappling with towering debt burdens, have the luxury of time, at least relative to Greece, and can structure privatisation deals to maximise their impact and bide their time on pricing.

And though all of these countries have felt the heat from the markets, Greece has become almost synonymous with the deep crisis at the heart of the euro zone, which has hollowed out its appeal to investors. "It is not clear Greece has the luxury of doing anything in an optimal way; they are basically burning the furniture just to get by," Bill Megginson, Professor of Finance at the University of Oklahoma, told Reuters. "But other countries, especially where the crisis seems to have abated a bit, like Italy and Spain, they could and they probably will."

Greece came up with plans for asset sales to convince its lenders it was serious about reforming its uncompetitive economy and also to raise funds to pay down its debt mountain. But the EU and IMF, which pushed Greece for bolder and more detailed plans as to how it would deliver on its promises, have become increasingly frustrated with the country's repeated failure to meet targets. Despite a reluctance to sell assets in such poor market conditions, Greece - which aims to raise 19 billion euros ($25 billion) from privatisations by 2015 - has begun ramping up its efforts, including inviting bids for state-owned natural gas company DEPA and the management rights to its Olympic broadcasting complex. It plans to put stakes in betting monopoly OPAP and refiner Hellenic Petroleum up for sale by May, Greece's chief privatisation official said.

But its tight timeframe and ambitious targets, already scaled back from 50 billion euros, suggest it will struggle to meet its price expectations. "There is a big risk ... the long-term strategy for the businesses and getting a fair price for the taxpayer falls by the wayside," said David Parker, Emeritus Professor of Privatisation and Regulation at the Cranfield School of Management. "We are certainly going to have a risk that the government sells off industries without really thinking about the long-term implications."

Greek Mission to Shrink the Public Sector Accomplished

It was last year when among rumors that the public sector in Greece is overloaded were spread from different mouths claiming that their actual number is between 1 and 1,5 million. The government announced that every public worker should submit his personal info if he wished to remain in the payroll in order to count them properly. The result have revealed that their total is 768.009. In fact, according to the report titled "The size and performance of public sector activities in Europe» conducted by four researchers of the Strasbourg University, Greece's public sector is 11,4% of the total working force putting Greece in the 15th place among 17 European countries.

Furthermore, as you can see at the following table Greece's total government expenditure as a % of the GDP is not too high as it was supposed.

It is worth noting that the most well paid public workers belong to the Ministry of Economics where the new employees get a 40% bigger salary than the average of anyone in any other ministry. While the lowest monthly salary is 751 euros (for those above 25 years old) the members of the Parliament enjoy 6,700 euros monthly on the average and the famous "asset means declaration" that was promised by many subsequent governments remains still an improbability. Meanwhile the average pension is up to 617 euros when the 50% of the pensioners get less than 500 euros and only a 14% over 1,000 per month. Finally, keep in mind that in many cases the procedure of denationalizing turns to be very expensive. For instance the "OTE" National Telecommunications Company went under the procedure of privatization on 1999 which was accomplished by 2008. The cost of the advisor companies (like Morgan Stanley, Deutsch Bank, EFG Eurobank) came up to 41,712,354 euros.